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Email this6:36 pm
February 4, 2017
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I'm having trouble understanding the interest rate terms of various gic offerings.
Wow! I see an advertised rate of 2.4 % over 3 years. When I read the details there's a bunch of double talk. It's not 2.4% per annum. It's 2.4 over the 3 year term.
What should I be looking for and how do I decipher the fine print? Sorry for my ignorance but I am confused by all the different terms.
6:43 pm
October 21, 2013
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I look for when it is paid out and whether it is compounded annually.
I find Oaken's website to be one of the clearer ones in this regard, as an example. No "monkey business" there.
https://www.oaken.com/gic-rates/
6:51 pm
February 24, 2015
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OP, do you have a link to this offer? I always thought that FIs were required to advertise the annual rate. I see that BMO advertises "up to 16% after 4 years" in their market linked product, but that is not so outrageous as saying 2.4% and meaning 0.8%
7:22 pm
February 4, 2017
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I made up that example. I think the problem is my understanding. The interest rate should include per annum right? I have a paper in front of me from ValleyFirst for example.
They have a 15 month non-redeemable. Rate - 1.50%. It does not say per annum so I assume that is 1.5% interest over the 15 months. There are no other details. I think most of us think per annum and are the banks a little shady with how they portray their rates?
8:07 pm
April 6, 2013
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Ah yes: Is that rate "per term" or "per annum"? There was a lengthy ordeal about that in the thread Something to be aware of with "odd-month" GICs.
Usually rates of fixed income instruments are quoted as a per annum rate. That's even true for short term instruments like 90-day Government of Canada treasury bills and 30-day banker's acceptances.
I've only seen per term rates used in marketing material for market-linked deposits.
That Valley First 1.50% 15-month non-redeemable term is likely 1½% per annum. This is from Valley First - Feel confident about your financial future about their 15 month non-redeemable term deposit:
Key Features & Benefits
• Low minimum deposit with no maximum
• Available as a registered product so you can tax shelter the interest you earn
• Interest rates are per annum and paid annually
• Deposits are 100% guaranteed by the Credit Union Deposit Insurance Corporation of British Columbia†
8:17 pm
February 4, 2017
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Thanks for finding that. Info is pretty plain online for that particular offering.
Thanks for the forum link.
9:53 pm
October 21, 2013
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There is similar confusion with the current Meridian offer of 2.2% for 18 months. With some effort, you can find online that this is an annual rate. My branch manager assures me it includes annual compounding.
I wish they'd all set up their rates charts like Oaken.
I find the term "paid annually" inadequate by itself, especially in regards to non-registered funds because it doesn't tell me whether the money is paid out to me or reinvested (compounded).
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